Exhibit 99.1
Press Release
Contacts:
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Ronald W. Guire, Exec. VP, CFO Thomas R. Melendrez, Senior Vice President (510) 668-7000 | | For Release 8:00 a.m. EDT October 19, 2005 |
Exar Corporation Announces Results for Second Quarter Fiscal 2006
Fremont, CA, October 19, 2005 – Exar Corporation (NASDAQ: EXAR), a leading provider of high-performance, mixed-signal silicon solutions for the worldwide communications infrastructure, today reported fiscal 2006 second quarter operating results. Revenue for the quarter ended September 30, 2005 was $16.5 million, an improvement of 3.9% sequentially from $15.9 million in the first quarter of fiscal 2006 and up 16.6% from $14.2 million for the same period last year.
Second quarter operating loss was $0.48 million, as compared to a loss of $0.76 million for the prior quarter. Operating income was $0.27 million for the same period last year, which included a gain of $1.2 million from a previously disclosed litigation settlement. Net income for the quarter was $2.1 million, as compared to $1.8 million for the prior quarter and $1.9 million for the second quarter of fiscal 2005. For the fiscal second quarter, EPS was $0.05 per diluted share, as compared to $0.04 for the prior quarter and $0.04 for the same period last year.
Gross margin was 66.5%, which reflects the effect of a $0.24 million charge for amortization of intangible assets associated with the acquisition completed in the first quarter of fiscal 2006, as compared to 67.0% in the prior fiscal quarter. Cash, cash equivalents and marketable securities decreased by approximately $112 million in the quarter due to the previously announced completion of the $120 million Modified Dutch Auction Self Tender Offer.
“We continue to be encouraged by our design win activity in both our networking and interface markets, and inventories overall appear to be in balance relative to the demand for our products; however, visibility still continues to be limited,” said Roubik Gregorian, chief executive officer and president. “Our engagement with Alcatel continues to strengthen as Alcatel represented 13.9% of net revenue during the quarter,” said Dr. Gregorian. “Our announcement earlier this week of a multi-protocol over Sonet/
SDH device demonstrates our ongoing commitment to broaden our product offering and targets the emerging metro ethernet equipment markets.”
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Product Summary
Industry Firsts
The Company continued its focus on technology leadership and earlier this week introduced the XRT95L53 (EXtendAR 48Mtm) — the industry’s first universal OC-48/STM-16, Quad OC-12/STM-4 and OC-3/STM-1 multi-protocol framer. It is the first in a family of multi-protocol over SONET/SDH framers extending the Company’s market penetration into next generation metro core and transport network markets.
In addition, during this quarter the Company introduced the industry’s first integrated 28 channel T1/E1 LIU/framer with VT/TU Mapper/DeMapper. Increasing one of the most extensive portfolios of T/E physical–layer devices, the XRT86SH328 (Voyagertm) is optimized for tributary aggregation applications such as multi-service provisioning platforms, optical transport systems, routers and wireless transport systems.
New Products
The Company also extended its clock and timing product offering with the introduction of a family of zero delay buffers. The family’s first two highly integrated devices minimize external components in most applications, which translates to reduced board space and cost. These low skew and low-noise zero delay buffers target a wide range of applications spanning from consumer and industrial to networking and computing.
Modified Dutch Auction Self Tender Offer (“Tender Offer”)
In the second fiscal quarter 2006, the Company completed its previously announced Tender Offer. The Company repurchased 7,500,000 shares of its common stock at a purchase price of $16.00 per share, resulting in aggregate payments of $120 million plus costs of $775,000. Based on the final count by the depository for the Tender Offer (and excluding conditional tenders which were not accepted due to the specified condition not being satisfied), an aggregate of 9,424,989 shares were properly tendered and not withdrawn at or below the purchase price of $16.00 per share. The 7,500,000 shares purchased were comprised of the 7,058,823 shares the Company offered to purchase and 441,177 shares purchased pursuant to the Company’s right to purchase up to an additional 2% of its outstanding shares without extending the Tender Offer.
Regulatory Compliance/Current Business Outlook
The Company adheres to the Securities and Exchange Commission’s requirements governing public company reporting obligations. The Company intends to provide its investors, financial analysts, and the general public with guidance each quarter in its earnings news release and its conference calls. The Company will not provide any further guidance or updates on its performance during the quarter unless it does so in a news release, such as this one, or in such other manner that is compliant with Regulation FD and Regulation G, as the case may be, and other applicable laws, rules and regulations.
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The Company’s statements about its future financial performance are based on current information and expectations and the Company undertakes no duty to update such statements. The statements are forward-looking and actual results could differ materially due to various risks and uncertainties, some of which are described below. For the third quarter fiscal 2006 ending December 31, 2005, the Company is forecasting revenue growth of 2% to 4% with projected EPS of approximately $0.05 per diluted share.
Earnings Conference Call
The Company invites investors, financial analysts, and the general public to listen to its conference call discussing the Company’s financial results for the second quarter fiscal 2006, today, Wednesday, October 19, at 1:30 p.m. EDT. To access the conference call, please dial (800) 874-8975 by 1:20 p.m. EDT and use conference ID number 1054444. In addition, a live webcast will also be available. To access the webcast, please go to the Company’s Investors’ Homepage at: http://www.exar.com. A replay of the call will be available starting at 5:30 p.m. EDT today until 8:00 p.m. EDT on October 26, 2005. To access the replay, please dial (800) 642-1687 and use conference ID number 1054444.
Safe Harbor
The Company’s statements about its future financial performance, design win activity, balance in inventories and relationship with Alcatel, and the accretive nature of the Infineon transaction, among others, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include global economic and industry conditions, such as the level of capital spending in the telecommunications and data communications markets; continued softness in demand for and limited visibility associated with network and transmission products; the possible loss of, or decrease in orders from, an important customer, such as Alcatel; adjustments in interest rates; possible disruption in commercial activities as a consequence of terrorist activity, natural disasters, armed conflict or health issues; successful development, market acceptance and demand for the Company’s products including those recently acquired and those for which the Company has achieved design wins; competitive factors, such as pricing or competing solutions, customer ordering patterns; shortfall in anticipated revenue from or manufacturing issues related to the recently acquired Infineon products; the level of inventories maintained at the Company’s OEMs and distributors; and the Company’s successful execution of internal performance plans, as well as the other risks detailed from time to time in the Company’s SEC reports, including the Annual Report on Form 10-K for the year ended March 31, 2005, and Form 10-Q for the fiscal quarter ended June 30, 2005.
About Exar
Exar Corporation, celebrating its 20th year on Nasdaq, designs, develops and markets high-performance, analog and mixed-signal silicon solutions for the worldwide communications infrastructure. Leveraging its industry-proven analog design expertise, system-level knowledge and standard CMOS process technologies, the Company provides OEMs innovative, highly integrated ICs that facilitate the transport and aggregation of signals in access, metro and wide area networks. The Company’s physical layer silicon solutions address transmission standards such as T/E carrier, ATM and SONET. The Company also provides one of the industry’s most
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comprehensive family of serial communications solutions. Within this product offering, the low voltage and multi-channel universal asynchronous receiver transmitters are particularly well suited to support high data rate and increasing data transfer efficiency requirements for various industrial, telecom and computer server applications. In addition, the Company offers a portfolio of clock generation and clock distribution devices for a wide range of communications systems. The Company is based in Fremont, CA, had fiscal 2005 revenues of $57.4 million, and employs approximately 275 people worldwide. For more information about the Company visit: http://www.exar.com.
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EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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| | | SEPTEMBER 30, 2005
| | MARCH 31, 2005
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| ASSETS | | | | | | |
Current assets: | | | | | | |
Cash, cash equivalents and marketable securities | | $ | 325,652 | | $ | 446,285 |
Accounts receivable, net | | | 5,254 | | | 3,899 |
Inventories | | | 4,072 | | | 3,659 |
Other current assets | | | 7,002 | | | 6,340 |
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Total current assets | | | 341,980 | | | 460,183 |
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Property, plant and equipment, net | | | 29,099 | | | 27,317 |
Other long-term investments | | | 3,508 | | | 3,978 |
Deferred income taxes, net | | | 11,343 | | | 11,130 |
Goodwill and intangible assets, net | | | 10,501 | | | — |
Other non-current assets | | | 1,250 | | | 1,672 |
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Total assets | | $ | 397,681 | | $ | 504,280 |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current liabilities | | $ | 18,458 | | $ | 12,891 |
Long-term obligations | | | 1,316 | | | 1,342 |
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Total liabilities | | | 19,774 | | | 14,233 |
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Total stockholders’ equity | | | 377,907 | | | 490,047 |
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Total liabilities and stockholders’ equity | | $ | 397,681 | | $ | 504,280 |
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EXAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
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| | | THREE MONTHS ENDED
| | SIX MONTHS ENDED
SEPTEMBER 30,
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| | | SEPTEMBER 30, 2005
| | | JUNE 30, 2005
| | | SEPTEMBER 30, 2004
| | 2005
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Net sales | | $ | 16,528 | | | $ | 15,912 | | | $ | 14,181 | | $ | 32,440 | | | $ | 30,468 |
Cost of sales: | | | | | | | | | | | | | | | | | | |
Product cost of sales | | | 5,303 | | | | 5,051 | | | | 4,522 | | | 10,354 | | | | 9,778 |
Amortization of purchased intangible assets | | | 240 | | | | 200 | | | | — | | | 440 | | | | — |
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Total cost of sales | | | 5,543 | | | | 5,251 | | | | 4,522 | | | 10,794 | | | | 9,778 |
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Gross profit | | | 10,985 | | | | 10,661 | | | | 9,659 | | | 21,646 | | | | 20,690 |
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Operating expenses: | | | | | | | | | | | | | | | | | | |
Research and development | | | 6,022 | | | | 6,232 | | | | 5,371 | | | 12,254 | | | | 11,030 |
Selling, general and administrative | | | 5,443 | | | | 5,186 | | | | 5,231 | | | 10,629 | | | | 10,562 |
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Total operating expenses | | | 11,465 | | | | 11,418 | | | | 10,602 | | | 22,883 | | | | 21,592 |
Gain on legal settlement | | | — | | | | — | | | | 1,208 | | | — | | | | 1,208 |
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Income (loss) from operations | | | (480 | ) | | | (757 | ) | | | 265 | | | (1,237 | ) | | | 306 |
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Interest income and other, net | | | 3,234 | | | | 3,000 | | | | 1,951 | | | 6,234 | | | | 3,539 |
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Income before income taxes | | | 2,754 | | | | 2,243 | | | | 2,216 | | | 4,997 | | | | 3,845 |
Provision for income taxes | | | 690 | | | | 493 | | | | 347 | | | 1,183 | | | | 673 |
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Net income | | $ | 2,064 | | | $ | 1,750 | | | $ | 1,869 | | $ | 3,814 | | | $ | 3,172 |
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Earnings per share: | | | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.05 | | | $ | 0.04 | | | $ | 0.05 | | $ | 0.09 | | | $ | 0.08 |
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Diluted earnings per share | | $ | 0.05 | | | $ | 0.04 | | | $ | 0.04 | | $ | 0.09 | | | $ | 0.07 |
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Shares used in the computation of earnings per share: | | | | | | | | | | | | | | | | | | |
Basic | | | 39,711 | | | | 42,222 | | | | 41,400 | | | 40,967 | | | | 41,331 |
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Diluted | | | 40,365 | | | | 42,687 | | | | 42,198 | | | 41,526 | | | | 42,309 |
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